Archive for the ‘Economics’ Category

While unauthorized immigrants worked and contributed as much as $13 billion in payroll taxes to the OASDI [Social Security and Disability Insurance] program in 2010, only about $1 billion in benefit payments during 2010 are attributable to unauthorized work. Thus, we estimate that earnings by unauthorized immigrants result in a net positive effect on Social Security financial status generally, and that this effect contributed roughly $12 billion to the cash flow of the program for 2010. We estimate that future years will experience a continuation of this positive impact on the trust funds.

The history of Korean immigration in the New York City area is rich with lessons about the pathways for an immigrant population.

Due to racist immigration restrictions, there were hardly any Koreans in the United States before the 1965 reform act. There was a surge between the mid 1970s and the 1990s, then a subsiding, as economic and political conditions on Korea improved. About one tenth of them came to the New York City area. For the most part they were not well educated and had problems with English. They lived in enclaves in Queens.

They took to self-employment, starting or buying small businesses as neighborhood groceries in poor communities. The Korean grocery became a common feature. Korean grocers served a traditional economic function of middlemen between economic classes. Then, grocery chains killed off the neighborhood grocery, and they turned to services for the middle class—nail salons and dry cleaners. Koreans currently dominate these sectors. Immigrants in the U.S. are more than native Americans inclined to running small businesses because they offer compared to employment relatively better economic prospects.

In the area in Lower Manhattan, at Broadway and 32nd St., became known as Korea Town due to the concentration of import and wholesale companies….these companies have almost completely left and the area transformed to Korean restaurants, salons and shops.

Gradually more formally educated Koreans arrived, such as graduate students who may have studied on the West Coast and migrated to New York. Starting in the 1990s, and accelerating after 2000, many Koreans left New York City for middle class communities in Bergen County in New Jersey, where there are a lot of Korean amenities.

There about 150,000 Korean immigrants in the New York City area now. Nationwide, these immigrants are better educated than native born Americans. The Korean population for the entire country, one million, has been flat for some years.

Much of this is from a chapter on Koreans in New York City by Pyong Gap Min, in One out of three: Immigrant New York in the 21st Century.

The Conversable Economist blog cites and comments on new U.N. report on migrants worldwide. Here are excerpts:

“….there were around 244 million international migrants in the world in 2015, which equates to 3.3 per cent of the global population…. In 2016 there were 40.3 million internally displaced persons (IDPs) worldwide… the total number of people estimated to have been displaced globally is the highest on record. …

“The wages that migrants earn abroad can be many multiples of what they could earn doing similar jobs at home. For example, a study conducted in 2009 found that the ratio of wages earned by workers in the United States to wages earned by identical workers with the same country of birth, years of schooling, age and sex, and rural/urban residence) abroad [has a median ratio of 4.11.

“….according to a recent report by the World Bank, immigrants from the poorest countries, on average, experienced a 15-fold increase in income, a doubling of school enrollment rates, and a 16-fold reduction in child mortality after moving to a developed country,

“According to the World Bank, in 1990 migrants remitted around USD 29 billion to lower- and middle-income countries in 1990. This amount had more than doubled to USD 74 billion in 2000 and reached USD 429 billion in 2016. Globally, remittances are now more than three times the amount of official development assistance.

“….it is increasingly recognized that migrants can play a significant role in post-conflict reconstruction and recovery.

“… Immigration increases both the supply of and the demand for labour, which means that labour immigration (including of lower-skilled workers) can generate additional employment opportunities for existing workers. Of course, immigration can also have adverse labour market effects (e.g. on wages and employment of domestic workers), but most of the research literature finds that these negative impacts tend to be quite small, at least on average.

….in contrast to popular perceptions, a recent OECD study found that the net fiscal effects of immigration, i.e. the taxes migrants pay minus the benefits and government services they receive, tend to be quite small and – for most OECD countries analysed in the study – positive.”

The Congressional Budget Office released on December 15 an analysis of the fiscal impact on the federal government if the DREAMERs were to be given full permanent legal status. An anti-immigration group, the Federation for American Immigration Reform (FAIR), immediately said that the report justifies denying the dreamers the dreamers legal resident rights.

The CBO report is a woefully incomplete profile of the economic and federal fiscal impact of dreamers. Here is why: it focuses on incremental federal outlays for the healthcare of these now legal workers without taking into account their contribution to economic production and to federal income tax payments.

It’s sort of like saying that hedge fund managers living in Greenwich CT. are a net cost to the city because they demand a higher public school budget.

The report, after analyzing a bill submitted in Congress in 2018 to give permanent legal status to dreamers, estimates that, with some expansion of the dreamer population by this bill, two million persons are covered. The analysis does not address the workforce contribution of these persons, and thus leaves out their financial contribution in federal, state and local taxes.

A rough estimate of their income tax payments is as follows. It is reasonable to assume that at least 75% of these two million persons, when they are of working age, will be in the workforce. The median annual wage in the U.S. is about $37,000. Let’s assume that the average annual income of these 1.5 million workers is $28,000. Federal taxes on an individual earning that amount is about $3,400. This totals to $5.1 billion annually in federal income taxes.

The CBO report pretty much assumes that these persons prior to legalization do not receive Medicaid benefits or Affordable Care Act (Obamacare) premium subsidies. It estimates these costs after legalization to average, over the first ten years after legalization, at about $1.05 billion a year. The CBO lists other federal expenses but they are minor compared to these healthcare benefits.

This roughly one billion a year incremental cost is (1) less than one fifth of their annual federal income tax payments, and (2) consistent what legal American workers are receiving right now in health subsidies. These costs are the result of making 1.5 million workers legal, allowing them to progress in their work, during their early working years, towards higher wages.

The government settled in September with a company for $95 million over past used of undocumented workers. This is the largest settlement ever with an employer over illegal employment.

The Trump administration is, in effect, going after employers with the threat of huge fines, and avoiding the worksite raids which, around 2006, caused terrible press. This strategy is consistent with my prior comments that this administration will drive as far as possible to throttle immigration through Executive Branch initiatives that do not require the participation of Congress.

The government’s press release includes: “Asplundh Tree Experts, Co., one of the largest privately-held companies in the United States, headquartered in Willow Grove, Pennsylvania pleaded guilty today [Sept. 29, 2017] to unlawfully employing aliens, in connection with a scheme in which the highest levels of Asplundh management remained willfully blind while lower level managers hired and rehired employees they knew to be ineligible to work in the United States.

“According to court documents, from 2010 until December 2014, Asplundh, an industry leader in tree trimming and brush clearance for power and gas lines, hired and rehired employees in many regions in the United States accepting identification documents it knew to be false and fraudulent. A six-year HSI audit and investigation revealed that the company decentralized its hiring so Sponsors (the highest levels of management) could remain willfully blind while Supervisors and General Foremen (2nd and 3rd level supervisors) hired ineligible workers, including unauthorized aliens, in the field. Hiring was by word of mouth referrals rather than through any systematic application process. This manner of hiring enabled Supervisors and General Foremen to hire a work force that was readily available and at their disposal.

“This decentralized model tacitly perpetuated fraudulent hiring practices that, in turn, maximized productivity and profit. With a motivated work force, including unauthorized aliens willing to be relocated and respond to weather related events around the nation, Asplundh had crews which were easily mobilized that enabled them to dominate the market. Asplundh provided all the incentives to managers to skirt immigration law.”

Rural Migration News reports that temporary farm workers have more than doubled in numbers in the past few years, and are approaching 10% of the entire wage workers in farming.

The H-2A program has since 1987 allowed farmers anticipating too few farm workers to apply for certification to employ guest workers. The H-2 program was created in the 1952 Immigration and Nationality Act.

Between the 1950s and the 1990s, most H-2/A workers were Jamaicans who hand cut sugar cane in Florida and picked apples along the eastern seaboard. The number of H-2A jobs certified fell after the Florida sugar cane harvest was mechanized in response to worker suits alleging underpayment of wages. In FY1985, the US Department of Labor certified 20,700 jobs to be filled by then H-2 workers, including 10,000 in sugar cane.

In 2012, when DOL certified 85,248 jobs to be filled by H-2A workers, 5,400 certified employers offered an average 33 weeks of employment for an average 43 hours a week.

Farm employers must pay the Adverse Effect Wage Rate, which is the average hourly earnings of field and livestock workers reported to USDA by farm employers the previous year. AEWRs for 2017 range from $10.38 an hour in the south to $13.79 in the Plains states, above federal and state minimum wages. Farmers would like to end recruitment, housing, and wage requirements.

Since the 2008-09 recession, farmer requests for H-2A workers have increased, and the number of jobs certified to be filled by H-2A workers could top 200,000 jobs in 2017.

Average employment covered by unemployment insurance on US crop farms is almost 900,000, including 560,000 workers hired directly by crop farmers and 331,000 workers brought to farms by crop support services. If 160,000 H-2A workers are employed an average 26 weeks in FY17, they would be equivalent to 80,000 full-time workers, and H-2A workers would be nine percent of all workers employed on crop farms.

After three years of lobbying and negotiation Ben and Jerry’s agreed with Vermont-based Migrant Justice over a Milk with Dignity pact. In 2014, Migrant Justice began the Milk with Dignity campaign with large corporations, such as Ben & Jerry’s, to promote justice for dairy workers. It is modeled after the Fair Food Program in Florida a program. The agreement includes:

Farmworker-Authored Code of Conduct: Farms in Ben & Jerry’s supply chain must meet the standards defined by farmworkers in wages, scheduling, housing, health and safety, and the right to work free from retaliation;

Farmworker Education: From day one, workers in the program will be educated on their rights under the code of conduct and how to enforce them. Workers will become frontline defenders of their own human rights.

Third Party Monitoring Body: The newly-created Milk with Dignity Standards Council (MDSC) will enforce the agreement by auditing farms’ compliance with the code of conduct, receiving, investigating and resolving worker grievances, and creating improvement plans to address violations. The MDSC will work with farmers and farmworkers in order to problem-solve issues as they arise seeking to improve communication and participation in the workplace. It may suspend a farm from the program if the farm is unwilling to meet the standards in the code of conduct, creating strong market incentives to improve conditions and make workers’ human rights a reality.

Economic relief: Ben & Jerry’s will pay a premium to all participating farms in their supply chain. The premium provides workers with a bonus in each paycheck and serves to offset farms’ costs of compliance with the code of conduct.

Legally-binding Agreement: Ben & Jerry’s has signed a legally-binding agreement that defines the program as a long-term contract enforceable under law.

The agreement with Ben and Jerry’s is modeled after what the Coalition of Immokalee Workers struck with tomato growers in Florida. In 2011, CIW launched the Fair Food Program (FFP), a groundbreaking model for Worker-driven Social Responsibility (WSR) based on a unique partnership among farmworkers, Florida tomato growers, and participating retail buyers, including Subway, Whole Foods, and Walmart. In 2015, the Program expanded into tomatoes in Georgia, South Carolina, North Carolina, Maryland, Virginia and New Jersey, as well as Florida strawberries and peppers.

Under the FFP:

CIW conducts worker-to-worker education sessions, held on-the-farm and on-the-clock, on the new labor standards set forth in the program’s Fair Food Code of Conduct;

The Fair Food Standards Council, a third-party monitor created to ensure compliance with the FFP, conducts regular audits and carries out ongoing complaint investigation and resolution; and

Participating buyers pay a small Fair Food premium which tomato growers pass on to workers as a line-item bonus on their regular paychecks (Between January 2011 and October 2015, $20 million in Fair Food premiums were paid into the Program).

The English language proficiency of immigrants has increased, most notably in the past ten or so years. This upward trend is seen in important groups such as Mexicans. But English language proficiency of Mexican immigrants declined in the 1990s. What was the impact of that, and why did it happen? The explanation has to do with demographics of immigrants and job growth in the 1990s.

Researchers looked at the impact on earnings and education when immigrants learn English. English proficiency helps in getting better paying jobs. It also enables the immigrant to obtain more formal education. Another study found that the benefits of English proficiency were primarily in becoming more educated. Young persons with English were more inclined to complete high school.

Demographic trends actually caused English proficiency among low skilled immigrants to decline. In 1990, 80% of individuals from non English-speaking countries said that they spoke English very well. In 2000, 70% said so. The decline is due to the large increase in immigrants, many unauthorized, in the 1990s.

During that decade, an hourglass profile of workers and jobs enlarged. There was a sharp increase in demand for service workers such as food preparation, janitors, gardeners, security guards, housekeeping ,cleaning and laundry workers. These low skilled jobs require limited language skills.

The English language skills of these jobholders declined in the 1990s. On factor in lower English proficiency is that with larger numbers of non-English proficient residents, these individuals were more able to find work that did not require English proficiency. This led to great linguistic and cultural isolation.

One researcher, writing in 2015 (Cassidy) found a large decline in the earnings of childhood immigrants in the U.S. between 1990 and 2010, and in particular during the 1990s. This drop in earnings has occurred across all age at arrival groups, but has disproportionately impacted lower-educated immigrants. A large decline in English language proficiency can explain much of this trend. A concentration of source countries (largely, through not entirely, due to an increase in Mexican immigration) has also contributed, mainly through the negative impacts it has had on English language proficiency and education levels.

See: Language Skills and the Earnings Distribution Among Child Immigrants, by Wang and Wang

The Decline in Earnings of Childhood Immigrants in the U.S., by Cassidy

The Wall Street Journal reports that “Demand in America for Mexican farmhands, landscapers and other temporary workers is surging as the Trump administration moves to curb immigration and renegotiate its trade relationship with Mexico.” The amount of non-skilled temporary visas issued in FY 2017 may exceed the peak reached in 2010, which was about 325,000.

In the first nine months of fiscal 2017, which began Oct. 1, the U.S. Labor Department certified more than 160,000 temporary workers—the bulk of them from Mexico—to harvest berries, tobacco and other crops in the U.S. under the H-2A agricultural visa program. That was up 20% from the period a year earlier.

The annual issuance of H-2A visas nearly doubled from 85,248 in fiscal 2012 to 165,741 in 2016. The U.S. doesn’t cap the number of these visas.

Outside of agriculture, use of another type of seasonal-work visa also has surged in response to increased U.S. demand for unskilled laborers such as hotel housekeepers. The Department of Homeland Security in July raised the annual cap on H-2B visas by more than 20% to 81,000. The majority of workers receiving this type of visa also are from Mexico.

In 2015, farmers in California’s Santa Barbara and San Luis Obispo counties, which grow roughly 30% of the strawberries in the U.S., reported $13 million in losses because they lacked enough labor to harvest their crops in a timely manner.

Last year, vegetable farmers in the two counties reported they had 22% fewer workers than needed on average, while berry farmers put the worker shortage at 26%, according to a survey conducted by a local growers association.

A lot of Trump’s economic revival ideas are “fighting the past war. What really matters is how we are faring globally in the industries of the future like: aviation, aerospace, biotechnology, semiconductors, software and the internet.” This from an interview with Robert Atkinson, an immigrant from Canada and proponent of innovation as our only real hope to prevail in the future

These industries depend on STEM workers (science, technology, engineering, and math). The core list of 46 STEM occupations are in computer and mathematics; engineering and surveying; physical and life science; and managerial. There are eight million of these STEM workers, about 5% of the entire workforce.

Nationally, about one-quarter of the nation’s STEM workforce is foreign-born, according to the report, “Foreign-born STEM Workers in the United States.” It has doubled from 11.9% in 1990 to 24.3% in 2015. They account for 47% of STEM workers with advanced degrees

In New Jersey 43% of STEM workers are foreign-born. In California, 42%.In New york, 29%. In 16 other states, foreign-born workers make up 20 percent or more of all STEM workers.